How Does Short Selling Work (Short Selling Explained)

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  • Опубликовано: 9 янв 2025

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  • @GoldenKennyBania
    @GoldenKennyBania 4 года назад +84

    4th place I’ve been to try and understand short selling and this is the first one that made it understandable. Thank you sir.

  • @ingridmadrigal8066
    @ingridmadrigal8066 4 года назад +20

    I’m a novice to investing and with what’s going on with $GME, I wanted to learn more about short selling and how WSB was taking the shorters down. This video made me understand things so much! Others don’t even talk about margins and were confusing, but yours was great. Thank you!

  • @wickywills
    @wickywills 4 года назад +16

    There's lots of other pretty videos on Short Selling with fancy animated graphics and shit, but they just made the concept harder to understand. This video made it so much clearer, so thank you! Consider that Like button smashed!

  • @tumanakoponga-kennedy5038
    @tumanakoponga-kennedy5038 3 года назад +3

    Best explanation i could find. The way you drew it up in real time and explained the 100 shares made this so much easier to understand. Thank you very much

  • @gracefan6395
    @gracefan6395 4 года назад +11

    Looked for many videos to understand Short selling, this is the one that finally made me understand it! Thank you!

  • @Hero-ky2rw
    @Hero-ky2rw 3 года назад +2

    After a few videos about short selling, I finally get it. It's backwards to investing long term and borrowing, this took a while for it to sink in on how you earn money from the stock losing money

  • @cathygillette4939
    @cathygillette4939 3 года назад +3

    This is the BEST explanation I have seen. Thanks Marko

  • @j-fit677
    @j-fit677 4 года назад +2

    I have listened to 5 videos and yours is the first one that makes sense to me. You are a good teacher. Thank you.

  • @MrFrancoMex
    @MrFrancoMex 3 года назад +2

    Ah! This guy explained in simple terms what shorting is! Now I understand that brokers already own shares of any given stock and that they are actually lending it to him or her, not selling it. That's the part that Investopedia doesn't explain about regarding how shorting works. As many others have noted, they too didn't understand the concept of short selling either until they watched this video!

  • @tmanley1985
    @tmanley1985 4 года назад +3

    I came here for a short, clear, intuitive video about short selling and that's exactly what I got. I guess you could say I invested my time well... I'll stop.

  • @tripsitter987
    @tripsitter987 3 года назад +3

    This is probably the best explanation i've come across. nice job explaining this in simple language

  • @ShaneHummus
    @ShaneHummus 5 лет назад +6

    Nice short-selling video Marko. Some others really don't know how this works, so this is a great video for them.

  • @DanielIles
    @DanielIles 5 лет назад +3

    Great introductory video. If you are really interested in short selling though I would recommend it in the summer. Pants sell best in the fall.

  • @dinotopher770
    @dinotopher770 4 года назад +2

    so far this is the best of 5 explainations

  • @shlomoz2495
    @shlomoz2495 4 года назад +85

    Came here to understand what the hell is going on with Gamestop. Now I understand!

    • @donadebrawarren
      @donadebrawarren 4 года назад +1

      Ditto!

    • @amaturearcadia
      @amaturearcadia 4 года назад +1

      Best video I've watched so far

    • @markbrunache648
      @markbrunache648 3 года назад

      Still don't understand. Don't loans or borrowing usually work that you have to pay back the loan at the price it was currently at no matter whether the value of the stock goes up or down?

    • @markbrunache648
      @markbrunache648 3 года назад

      @TrumpBrexit CovidBLM cool. Can you answer the question?

    • @tyewor3199
      @tyewor3199 3 года назад

      Same here.

  • @store_brand
    @store_brand 4 года назад +2

    Yo, thank you for actually explaining this. The fact that you did so before the GME comments later in this thread actually means a lot. You make it sound simple lol, also thank you for not asking for subs or bells even though I've now hit both.

  • @leslieburgess8680
    @leslieburgess8680 4 года назад +3

    I wanted to know what short selling meant. I watched many videos and read about it without understanding but you filled in a very important point that one needs an account with a broker who retains your original share debt until paid back at a later date when the shares rose or hopefully fell. Others just said you borrow and buy shares and immediately sell them straight back which made no sense. Thanks for explaining the process in full

  • @KishanK1022
    @KishanK1022 5 лет назад +7

    We all appreciate your time and effort you put into your videos. Thanks you bro and I can’t wait for the next video!

  • @FireballVFX
    @FireballVFX 3 года назад +1

    Best easy to understand explanation ever, thnx Marko!

  • @derrickpatrick1206
    @derrickpatrick1206 11 месяцев назад

    After many tutorials this explanation finally filled in the "gaps" . Thank You.

  • @ryanraines1469
    @ryanraines1469 4 года назад +1

    Best video I’ve seen explaining put options. Marko best in RUclips financial sector at breaking it down in layman terms

  • @MrPogingpayatot
    @MrPogingpayatot 3 года назад +1

    Finally understood it after watching several videos on shorting stocks. 👍🏼

  • @ChangingFrames
    @ChangingFrames 5 лет назад +6

    Never knew this concept of short selling based on securities; thanks for sharing - Marko.

  • @AverageJoeInvestor
    @AverageJoeInvestor 5 лет назад +8

    *GREAT VIDEO MARKO* Ultimately, Short Selling is purely speculative and the only way to win is to guess correctly and usually pretty quickly...best to stick with long-term investing in index funds with the S&P 500 or long-term dividend investing. GREAT VIDEO MARKO! 😎👍🏻

    • @marlinda6851
      @marlinda6851 5 лет назад +2

      Anybody who has traded stocks knows that is not true...Shorting is far from speculating, buying stocks can fall into that category however, because the natural trend of the market is up and it is logical ton conclude that prices will go up, most of the time they do, humans are by nature optimists and so are the people that run corporations, who only make money when the stock goes UP.
      Human nature being what it is, managers sometimes will do many things to push or keep the price of the stock high.
      Wouldn't you like to know where management is wrong, or padding the numbers, cooking the books, hyping the stock ("think Elon Musk") or outright commiting fraud? No one will tell you that.
      The "smart money" and everybody "on the street" will never tell you to sell but will always tell you to buy, the short sellers are disliked because people do not understand their function in the market, Shorts do not CAUSE stock prices to go down, shorting is NOT manipulation.
      A trader that is short a stock is trying to tell YOU "do not buy this stock because there is something wrong with it, hype, fraud, abuse, etc, shorts save "sheep" investors money by preventing these stocks from being mispriced by people who are following the hype and not the substance.

    • @marlinda6851
      @marlinda6851 5 лет назад +1

      A little knowledge can be a dangerous thing...playing in the stock market shouldn't be about "guessing", and if you're in it to make money, you are always buying, selling, or waiting to what breaks out, a Bull or a Bear, they are equally profitable or dangerous.

    • @AverageJoeInvestor
      @AverageJoeInvestor 5 лет назад

      marlinda6851 I never said shorting was BAD necessarily, just that you are speculating when you do so because market conditions can cause all stocks to go down or up in the short-term due to political climate, trade wars, etc. to speculate you have to make a bet on the stock direction just like those who hold the stock but generally have to be right much quicker than those who buy and hold...thanks for joining the conversation. 😎👍🏻

  • @sheppie8175
    @sheppie8175 3 года назад +1

    I appreciate what you do man. I already learn something when I watch your videos. Thank you man.

  • @michaeljaqua9223
    @michaeljaqua9223 3 года назад +1

    I wasn't quite grasping the concept until this, thank you Marko.

  • @juvanieg885
    @juvanieg885 4 года назад +2

    I watched few videos how to short sell and I never understood how it works, but this one made me understand .. Thank you

  • @genesofthapa17
    @genesofthapa17 3 года назад +1

    this guy has a great sense of humour.thank you for giving me the idea of fluber.

  • @Jupiter1423
    @Jupiter1423 2 года назад

    One of my favorite topics is the disucssion of going short an asset vs going long a put and how that better explains long vs short and bullish vs bearish. An equally important convo is the theory of replication in how assets, derivitives, and interest rates are all related and affect our understanding of long/short and bullish/bearish.

  • @mynameismin3
    @mynameismin3 3 года назад +1

    Finally a good explanation.

  • @Salishsea812
    @Salishsea812 3 года назад +1

    Thank you! This is the best video on this, the others just confused me even more!

  • @nicreese
    @nicreese 4 года назад +2

    Dude amazing video thank you I’ve been so confused and finally this video made it all click

  • @shaggybx
    @shaggybx 3 года назад +1

    I love all your videos Marko,you explain things so clearly even a dummy like me can understand thank you :)

  • @chopsticki3rock
    @chopsticki3rock 4 года назад

    Just got into learning about investing. First video I watched of yours was about purchasing a car. (We ended up not buying a new car since our vehicles are still working fine) but instead been investing in markets and ETFs with extra pocket money which we were gonna buy a car prior to your videos. Now with GME, I'm learning so much more. I appreciate everything you do!

    • @AnonymousInvestor0
      @AnonymousInvestor0 4 года назад

      Did you get into GME or just watching from the sidelines (like me). xD

    • @chopsticki3rock
      @chopsticki3rock 4 года назад

      @@AnonymousInvestor0 I've heard a rumor about some movement in GME few weeks before all this happened. Ended up just spectating

  • @fobmaster
    @fobmaster Год назад

    finally clicked and I've been trying to understand this for a few days now! Thanks!

  • @PHXMX
    @PHXMX 5 лет назад +3

    Great video! I am subscribed, but I did not sign up to get notified after you upload a new video. That changed today, I just clicked on that bell to get notified. You are going to do great here in RUclips now that you are dedicated to it. Get ready for those well deserved big checks from the Tube.

  • @diamonddagger7363
    @diamonddagger7363 3 года назад +1

    Thanks, this makes a lot more sense now, I may try short selling in the future.

  • @LiLith-ching
    @LiLith-ching 3 года назад +1

    Very well explained. 👍Thank you👏👏👏👏

  • @ccstreifel
    @ccstreifel 3 года назад +1

    Here because of my class, thanks.

  • @charlesormond964
    @charlesormond964 5 лет назад +2

    Marko, love your videos!!! Thank you and keep going!!!

  • @theodorehaskins3756
    @theodorehaskins3756 3 года назад

    Your presentations are excellent & easy to understand, so my advice to those who don’t understand what they’re doing is get educated, don’t listen to people who don’t know what they’re talking about & above all, don’t invest in things you don’t understand or things that keep you up at night! I learned this by listening to one of the most successful stock investors of all time Warren Buffett!

  • @kiwirangerover6052
    @kiwirangerover6052 3 года назад +1

    Good explanation! Thank you

  • @Justin_Joy
    @Justin_Joy 4 года назад +2

    This was very good explanation.

  • @lordrichard8184
    @lordrichard8184 5 лет назад +7

    I feel like I’m missing something. So to short a stock. You’re getting the 100 shares from the broker. Then you sell them at market value (10k). You wait a little. The stock moves. Then you buy the 100 shares to fulfill your promise to the broker of 100 shares. And you keep/lose the difference.

    • @WhiteBoardFinance
      @WhiteBoardFinance  5 лет назад +4

      correct

    • @Ladislav14
      @Ladislav14 5 лет назад +2

      @@WhiteBoardFinance - thank you for this video. I just yesterday found out your channel and started to watch all the videos relevant to me.
      I would like to ask/confirm: the difference between options and short selling is, that with short selling you described here, you have THE OBLIGATION to give those shares back to a broker - but with options, there is no obligation, so they are a bit more 'safe'. In options, you are paying just for THE RIGHT TO BUY/SELL, so you can lose money just for buying the premium. Is that correct, or completely wrong?
      I started to study all those things just 3 weeks ago from Jeremy (Financial Education channel) and a few other youtubers. Thank you!

    • @TheDotcee
      @TheDotcee 4 года назад

      Thanks Billy. This now makes sense

    • @TheDotcee
      @TheDotcee 4 года назад

      @@WhiteBoardFinance Great video. Thanks

  • @teddyperera8531
    @teddyperera8531 4 года назад +1

    best explanation on short selling

  • @juanajohnson50
    @juanajohnson50 3 года назад +1

    I appreciate this so much.. makes sense🤸🏽‍♀️

  • @elimuro3173
    @elimuro3173 4 года назад +1

    Much value from this video,god bless you!!!brother from another mother👍🏽👍🏽👍🏽👍🏽

  • @aponuro7746
    @aponuro7746 4 года назад +1

    I just came across your video. It definitely gave me clarity. Thanks

  • @thefireside1665
    @thefireside1665 3 года назад +1

    FINALLY- I get it. Thank you!

  • @BennyHarassi
    @BennyHarassi 4 года назад +36

    here because of gamestop

  • @Michael-qq7mm
    @Michael-qq7mm 4 года назад +14

    Explained it so well ...still don’t understand 🤣

    • @350Carmine
      @350Carmine 3 года назад +2

      Took me a while to get it. When he borrowed the 100 shares they were worth 10k and he instantly sold them. He only has the pay them back the number of shares not the amount they are worth. He waited for the market to drop and it was time to pay them back, so he was able to buy the 100 shares for 5,000k and he gave the 100 shares back to the person he borrowed from. He was able to make 5k

  • @michaeldodaro
    @michaeldodaro 2 года назад

    Very very good video. Explained the concept with a great step-by-step process, thank you!

  • @youngh3604
    @youngh3604 5 лет назад +2

    Oh snaps, I forgot to smash the like button.
    Like button smashed.

  • @melloscott1732
    @melloscott1732 4 года назад +1

    Thank you thank you so much for explaining this! I was wondering how did this work

  • @rachelsour97
    @rachelsour97 4 года назад +26

    *GAMESTOP stocks occur*
    Everyone interested/new to stocks: *Micheal Scott mentality* “why don’t you explain this to me like I’m five?”

    • @korkee1111
      @korkee1111 4 года назад +3

      Watched 4 videos on this and I still can't figure out how the hedge fund manager can make money after paying out to the investor... "why don't you explain this again, but like I'm three!"

    • @ZackD710
      @ZackD710 4 года назад +2

      You borrow the stocks at a value of 10 grand and sell them quickly for that hoping their value will go down, if it does then you can rebuy the same stocks at half the price to pay off your loan, otherwise you have too pay more for the same stocks

    • @korkee1111
      @korkee1111 4 года назад +1

      @@ZackD710 Yeah I watched a couple of other videos and it seems the only way it works out is by borrowing and by hoping something fails. Those are both things I don't like to do, I think if I did stock market BS I'd play the long game, seems safer and more optimistic.

    • @wayne9287
      @wayne9287 3 года назад

      What you say is true but I don't know if you're saying that just as an observation or you're trying to laugh at beginners. Either way your comment is useless.

  • @chamindasilva3191
    @chamindasilva3191 3 года назад +1

    Marko your presentation is awesome. Is there way you can dig in to some basic option strategies.??? Thanks.

  • @NaamWynn
    @NaamWynn 5 лет назад +9

    I rather buy inverse ETFs instead of shorting. I try to avoid margin whenever possible!

  • @SkimmerX
    @SkimmerX 3 года назад +1

    Haha I just paused at 1:32 to say man you are funny nice deadpan

  • @samhdz5347
    @samhdz5347 3 года назад +1

    Very well explained.

  • @pparker768
    @pparker768 5 лет назад +1

    Always wondered how shorting worked. Thanks.

  • @achiever_taurean2205
    @achiever_taurean2205 4 года назад +1

    Great explanation!

  • @skseth
    @skseth 4 года назад +1

    Great explanation, thanks!

  • @capitolia
    @capitolia 4 года назад +1

    Pretty clear explanation. Thanks, Marko!

  • @pa590skrt
    @pa590skrt 5 лет назад +1

    I love your videos!keep up the good work!

  • @cvasquez043
    @cvasquez043 4 года назад +1

    Well done explained.... Thanks.

  • @aleemkarimi948
    @aleemkarimi948 4 года назад +1

    Great video well explained -- did not only liked the video but also subscribed 😉 - thanks

  • @thiluong6678
    @thiluong6678 4 года назад +12

    thank you for the explanation! I do have one question about short selling though. Is there a timeframe in which the short sellers have to buy back the shares to pay to the lender?

    • @MrFrancoMex
      @MrFrancoMex 3 года назад

      I would like to know the to that as well!

    • @Dr.Unsteady
      @Dr.Unsteady 3 года назад

      There is, they all vary just depends on the contract

  • @Kburnzzzzzzz
    @Kburnzzzzzzz 2 года назад +1

    Had to watch this video so I could understand an episode of FBI 🤣 thank you for the knowledge

  • @hadrom420
    @hadrom420 4 года назад +1

    First time I actually understand it

  • @zipperdingo6385
    @zipperdingo6385 3 года назад +1

    Great interpretation

  • @joem.7621
    @joem.7621 5 лет назад +16

    That's flucking great.

  • @oliviamacpherson21
    @oliviamacpherson21 3 года назад +1

    You make it so easy

  • @jamietessier1635
    @jamietessier1635 5 лет назад +1

    Another great video always excited to learn something new from ur vids

  • @jaydmatacarita
    @jaydmatacarita 4 года назад +2

    I came here doubting you but you're quite thorough.

  • @LePopCollectibles
    @LePopCollectibles 4 года назад +1

    Very well explained, Marko. Thank you. It helped me to understand the Reddit/Gamestop situation.

  • @elinosv8730
    @elinosv8730 3 года назад +1

    You borrow the stock (100 shares) (for a small fee), you sell it (at $100) and get the 10k. When the price will fall at half, you buy the stock (at $50) (you used only 5K). You return the stock you borrowed and your are left with 5K.

  • @rolandoafender
    @rolandoafender 4 года назад +1

    Thank You, Valuable Piece of Information

  • @Happy-qd3yb
    @Happy-qd3yb 2 года назад

    finally a good explanation

  • @bornbrit777
    @bornbrit777 4 года назад +4

    On Short Sales, is there a time limit as to how long the short seller has to buy them back?

  • @TheJudgeJuryExecutioner
    @TheJudgeJuryExecutioner 3 года назад +1

    Ok so if this happens to go the right way, the broker is on the hook for the loss ? How does this benefit the broker if they allow this ? Or does more than likely the borrower bites the bullet.

  • @jayganesh1079
    @jayganesh1079 4 года назад

    At 0:13, you said "basically, shorting or short selling security is when you buy a security today and sell it back in the future hoping that the price has actually gone down" is it correct definition for short selling? I think it's just opposite.

  • @InVQke
    @InVQke 3 года назад +1

    god damn took me like 10 vids to get quality info...TY

  • @ramana0070
    @ramana0070 2 года назад

    Very well explained. Really appreciate it!

  • @CloudKrazed
    @CloudKrazed 4 года назад +1

    Great video, explained very well.

  • @ChrisInvests
    @ChrisInvests 5 лет назад +6

    Short selling summed up: Unlimited risk, Limited return 🤷‍♂️

    • @bigcelery33
      @bigcelery33 5 лет назад

      Short selling is not necessarily a limited return strategy. Most people erroneously believe that gains from shorting are only limited to 100% of the initial equity put up (assuming no use of margin) as the underlying asset can only go to a value of zero. This is only true if you merely short and hold and the underlying went to zero and you did nothing else. Shorting, unlike buy and hold, involves active management, especially since upside risk can be unlimited. If you are short and the underlying goes down, your account equity is now higher and you have excess equity over and above the equity needed to maintain your short position. Even if you are not using margin, if you want to maintain a “fully invested” short position that you had (or for that matter anything less than that but more than the current required equity) in that underlying, you have to short more as the underlying goes down. In this way, you can make more than 100% shorting (theoretically unlimited return until the asset actually trades at zero), even without the use of margin, as long as you short more of an underlying in a downtrend when you have excess equity. Alternatively, you can also take the extra equity out and invest it elsewhere.

  • @daddySAL
    @daddySAL Год назад

    that was really helpful on understanding for beginners

  • @chocoholic5645
    @chocoholic5645 4 года назад

    thanks!! I understand a lot better how short selling works!!
    However it is so shocking that in Korea (I am Korean) there is no margin account required and limited time for short sellers to payback so there is high chance for short sellers never lose money TT so the company Celltrion, which has the 2nd biggest short selling and its small sellers are struggling even though the company s annual market sales and profit has soared even almost doubled,
    but happy to hear the small investors in the USA are doing a fantastic job!!!!

  • @rommelpeters30
    @rommelpeters30 5 лет назад

    Smashed the like button as soon as you said it!

  • @waheguru1313
    @waheguru1313 4 года назад +12

    So short sellers either have insider information about when a stock is about to crash, or they create a large enough short position to seed doubt about the company itself and then profit when shares tank?? What the hell kind of system are we living in?

    • @magellanmax
      @magellanmax 4 года назад

      Not always insider information. Stocks are a form of gambling with a sprinkle of cheating here and there.

    • @glaive120
      @glaive120 3 года назад

      they dont always have insider information. gamestop was a failing company before covid and covid made it worse, anyone could bet theyd lose money and their stock would go down.

    • @suetanks2339
      @suetanks2339 3 года назад

      They create FUD(fear, uncertainty, and doubt) in the market, market manipulation to try to get retail investors to try and sell. Retail investors buy and hold, shorts lose. Retail investors panic sell, shorts win. They will try all types of tactics to try and get you to sell such as "fake" reports, some bogus lawsuit, any bad press. Wall street call retail investors "dumb money ", let's show them we're actually a lot smarter than they think

  • @CoreyLaGray
    @CoreyLaGray 5 лет назад

    I use short selling in conjunction with TVIX to create what I call the short bounce play. As TVIX goes down I will have limit orders to buy at specific price points and when those orders are executed Think Or Swim automatically shorts the identical number of VXX shares. TVIX and VXX always move in the same direction, however, TVIX moves at a much more pronounced rate so having identical share counts does not create a zero sum situation. Rather, VXX makes money as it goes down and hedges (partially) against the loss incurred by being long TVIX. When the VXX short is covered the overall distance to get back to break even and or green with a TVIX pop is much, much shorter (short bounce to green).

  • @GuyDarby
    @GuyDarby 4 года назад +1

    What is the time frame that you can wait to pay the shares back ?

  • @jerrynix5206
    @jerrynix5206 5 лет назад

    Yo Marko great video, I really like these types of vids man!

  • @colinthompson5386
    @colinthompson5386 4 года назад +1

    Very informative video.

  • @calvinraab8798
    @calvinraab8798 5 лет назад +4

    Does it work? Yes. Is it as easy as the youtube "guru"s make it out to be? Absolutely not. Great video Marko explaining a topic that is so often misunderstood!

  • @YersonSandy
    @YersonSandy 3 месяца назад

    Thanks for the forecast! Just a quick off-topic question: My OKX wallet holds some USDT, and I have the seed phrase. (air carpet target dish off jeans toilet sweet piano spoil fruit essay). How should I go about transferring them to Binance?

  • @JamesSmith-si2mz
    @JamesSmith-si2mz Год назад

    This is amazing 🤩

  • @madman4817
    @madman4817 4 года назад

    Basically the value/price of the borrowed stock remains the the same until when it is due in which you will have to buy stocks to return. If the initial price of the stock has fallen (short sell) then you will profit because you will need to buy less stocks to return (your borrowed stocks are worth more than the current price). However, if the price of the stock has gone up then you will need to buy and return the borrowed stocks at higher price which will result in a loss.
    Short sellers in the GameStop situation were betting that stock price will go down so they had borrowed stocks. But the price skyrocketed and when the borrowed stocks are due, they have to pay the market value of the stock.

  • @cal88usa
    @cal88usa 5 лет назад

    Great video. It was very informative and educational

  • @thomaaz
    @thomaaz 2 года назад +2

    thank you!

  • @OmSriUdayaKumarGade
    @OmSriUdayaKumarGade 5 лет назад +2

    Nice video Marco, it gave me a high level over view. I am learning many tips from your videos. Thanks you.